Money and Federal Reserve

You receive money as a payment for working at a grocery store. This best illustrates which function of money?

• Medium of Exchange

• Unit of Account

• Store of Value

• Commodity Money

Marcella puts money into her savings account. Which function of money does this illustrate?

• Unit of Account

• Medium of Exchange

• Store of Value

• Fiat Money

Which of the following would NOT be included in M1?

• $20 in your pocket 

• $1000 in your checking account

• $50,000 in your Roth IRA

• $6,000 buried in your backyard 

The agency responsible for regulating the money supply in the United States is: 

• The President of the United States

• The US Treasury 

• The Secretary of the Treasury 

• The Federal Reserve

The Federal Reserve has a total of __________ districts. 

• 10

• 11

• 12

• 13

All of the following are true about the Federal Reserve EXCEPT:

• The Federal Reserve is overseen by a seven-member Board of Governors

• The Federal Reserve is headquartered in New York City 

• The Board of Governors are appointed by the president of the US

• The Fed committee is referred to as the Federal Open Market Committee

What is the required reserve ratio?

• The amount of money that the Fed does not let bank borrow

• The reserves that the Fed requires banks to keep from the money deposited

• The interest rate banks charge each other

• The money kept by the Federal government

What is the Fed’s most used monetary policy tool?

• Open market operations

• Changing the discount rate

• Changing reserve requirements

• Borrowing money

How do banks “create” money?

• By getting permission to print money from the Federal Reserve

• By paying interest to their customers

• By selling off bank property

• By loaning out money that borrowers place in their checking accounts

Too much money in the economy leads to:

• Lower prices

• Higher interest rates

• A General rise in prices, known as inflation

• An increase in the Federal Funds Rate